SES saves $500m on SpaceX launches

Last week Luxembourg’s SES ordered up 3 launches from the Elon Musk-backed SpaceX rocket system. Industry experts now say that SpaceX, which uses the as yet commercially untested Falcon 9 rocket, is pricing its launches at about half that charged by the industry’s two giant suppliers Arianespace and International Launch Services (ILS) of Washington DC.

The trio of SES orders are additional to an existing order for a Falcon 9 launch scheduled for next summer, and which is booked to carry the SES-8 satellite. There will be one test flight of the complete Falcon 9 around June next year.

ILS CEO Frank McKenna, speaking at last week’s Euroconsult event in Paris, said he had calculated that SpaceX is charging around 50 percent less than his own company, and a similar discount compared to Arianespace. In other words, he argued, SpaceX’s current order book means that some $500 million in revenues had been removed from today’s commercial launch industry, which is not famous for operating with high margins.

For the satellite operators, of course, one person’s loss is their gain. SES CEO Romain Bausch, speaking to journalists at the event, said he was concerned about recent rocket launch failures by Russia’s Proton system – also used by ILS – gave him concerns. “There are obviously too many failures” [with the Proton system], Bausch said. “Even one failure is too many. We have a clause in our multi-launch agreement that allows us to step out of the contract if the number of failures exceeds a ceiling. We are not there yet, but we are getting closer.”

However, he also said that SES would not “abandon” ILS or Arianespace, but that SES was building a third leg to its launcher strategy.